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mostlysignssomeportents · 25 days

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Prison-tech company bribed jails to ban in-person visits

I'm on tour with my new, nationally bestselling novel The Bezzle! Catch me in BOSTON with Randall "XKCD" Munroe (Apr 11), then PROVIDENCE (Apr 12), and beyond!

Beware of geeks bearing gifts. When prison-tech companies started offering "free" tablets to America's vast army of prisoners, it set off alarm-bells for prison reform advocates – but not for the law-enforcement agencies that manage the great American carceral enterprise.

The pitch from these prison-tech companies was that they could cut the costs of locking people up while making jails and prisons safer. Hell, they'd even make life better for prisoners. And they'd do it for free!

These prison tablets would give every prisoner their own phone and their own video-conferencing terminal. They'd supply email, of course, and all the world's books, music, movies and games. Prisoners could maintain connections with the outside world, from family to continuing education. Sounds too good to be true, huh?

Here's the catch: all of these services are blisteringly expensive. Prisoners are accustomed to being gouged on phone calls – for years, prisons have done deals with private telcos that charge a fortune for prisoners' calls and split the take with prison administrators – but even by those standards, the calls you make on a tablet are still a ripoff.

Sure, there are some prisoners for whom money is no object – wealthy people who screwed up so bad they can't get bail and are stewing in a county lockup, along with the odd rich murderer or scammer serving a long bid. But most prisoners are poor. They start poor – the cops are more likely to arrest poor people than rich people, even for the same crime, and the poorer you are, the more likely you are to get convicted or be suckered into a plea bargain with a long sentence. State legislatures are easy to whip up into a froth about minimum sentences for shoplifters who steal $7 deodorant sticks, but they are wildly indifferent to the store owner's rampant wage-theft. Wage theft is by far the most costly form of property crime in America and it is almost entirely ignored:

https://www.theguardian.com/us-news/2023/jun/15/wage-theft-us-workers-employees

So America's prisons are heaving with its poorest citizens, and they're certainly not getting any richer while they're inside. While many prisoners hold jobs – prisoners produce $2b/year in goods and $9b/year in services – the average prison wage is $0.52/hour:

https://www.dollarsandsense.org/archives/2024/0324bowman.html

(In six states, prisoners get nothing; North Carolina law bans paying prisoners more than $1/day, the 13th Amendment to the US Constitution explicitly permits slavery – forced labor without pay – for prisoners.)

Likewise, prisoners' families are poor. They start poor – being poor is a strong correlate of being an American prisoner – and then one of their breadwinners is put behind bars, taking their income with them. The family savings go to paying a lawyer.

Prison-tech is a bet that these poor people, locked up and paid $1/day or less; or their families, deprived of an earner and in debt to a lawyer; will somehow come up with cash to pay $13 for a 20-minute phone call, $3 for an MP3, or double the Kindle price for an ebook.

How do you convince a prisoner earning $0.52/hour to spend $13 on a phone-call?

Well, for Securus and Viapath (AKA Global Tellink) – a pair of private equity backed prison monopolists who have swallowed nearly all their competitors – the answer was simple: they bribed prison officials to get rid of the prison phones.

Not just the phones, either: a pair of Michigan suits brought by the Civil Rights Corps accuse sheriffs and the state Department of Corrections of ending in-person visits in exchange for kickbacks from the money that prisoners' families would pay once the only way to reach their loved ones was over the "free" tablets:

https://arstechnica.com/tech-policy/2024/03/jails-banned-family-visits-to-make-more-money-on-video-calls-lawsuits-claim/

These two cases are just the tip of the iceberg; Civil Rights Corps says there are hundreds of jails and prisons where Securus and Viapath have struck similar corrupt bargains:

https://civilrightscorps.org/case/port-huron-michigan-right2hug/

And it's not just visits and calls. Prison-tech companies have convinced jails and prisons to eliminate mail and parcels. Letters to prisoners are scanned and delivered their tablets, at a price. Prisoners – and their loved ones – have to buy virtual "postage stamps" and pay one stamp per "page" of email. Scanned letters (say, hand-drawn birthday cards from your kids) cost several stamps:

https://pluralistic.net/2024/02/14/minnesota-nice/#shitty-technology-adoption-curve

Prisons and jails have also been convinced to eliminate their libraries and continuing education programs, and to get rid of TVs and recreational equipment. That way, prisoners will pay vastly inflated prices for streaming videos and DRM-locked music.

The icing on the cake? If the prison changes providers, all that data is wiped out – a prisoner serving decades of time will lose their music library, their kids' letters, the books they love. They can get some of that back – by working for $1/day – but the personal stuff? It's just gone.

Readers of my novels know all this. A prison-tech scam just like the one described in the Civil Rights Corps suits is at the center of my latest novel The Bezzle:

https://us.macmillan.com/books/9781250865878/thebezzle

Prison-tech has haunted me for years. At first, it was just the normal horror anyone with a shred of empathy would feel for prisoners and their families, captive customers for sadistic "businesses" that have figured out how to get the poorest, most desperate people in the country to make them billions. In the novel, I call prison-tech "a machine":

a million-armed robot whose every limb was tipped with a needle that sank itself into a different place on prisoners and their families and drew out a few more cc’s of blood.

But over time, that furious empathy gave way to dread. Prisoners are at the bottom of the shitty technology adoption curve. They endure the technological torments that haven't yet been sanded down on their bodies, normalized enough to impose them on people with a little more privilege and agency. I'm a long way up the curve from prisoners, but while the shitty technology curve may grind slow, it grinds fine:

https://pluralistic.net/2021/02/24/gwb-rumsfeld-monsters/#bossware

The future isn't here, it's just not evenly distributed. Prisoners are the ultimate early adopters of the technology that the richest, most powerful, most sadistic people in the country's corporate board-rooms would like to force us all to use.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/04/02/captive-customers/#guillotine-watch

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#pluralistic #prison #prison-tech #marty hench #the bezzle #securus #captive audiences #St Clair County #human rights #prisoners rights #viapath #gtl #global tellink #Genesee County #michigan #guillotine watch #carceral state #corruption

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mostlysignssomeportents · 19 days

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How to shatter the class solidarity of the ruling class

I'm touring my new, nationally bestselling novel The Bezzle! Catch me WEDNESDAY (Apr 11) at UCLA, then Chicago (Apr 17), Torino (Apr 21) Marin County (Apr 27), Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!

Audre Lorde counsels us that "The Master's Tools Will Never Dismantle the Master's House," while MLK said "the law cannot make a man love me, but it can restrain him from lynching me." Somewhere between replacing the system and using the system lies a pragmatic – if easily derailed – course.

Lorde is telling us that a rotten system can't be redeemed by using its own chosen reform mechanisms. King's telling us that unless we live, we can't fight – so anything within the system that makes it easier for your comrades to fight on can hasten the end of the system.

Take the problems of journalism. One old model of journalism funding involved wealthy newspaper families profiting handsomely by selling local appliance store owners the right to reach the townspeople who wanted to read sports-scores. These families expressed their patrician love of their town by peeling off some of those profits to pay reporters to sit through municipal council meetings or even travel overseas and get shot at.

In retrospect, this wasn't ever going to be a stable arrangement. It relied on both the inconstant generosity of newspaper barons and the absence of a superior way to show washing-machine ads to people who might want to buy washing machines. Neither of these were good long-term bets. Not only were newspaper barons easily distracted from their sense of patrician duty (especially when their own power was called into question), but there were lots of better ways to connect buyers and sellers lurking in potentia.

All of this was grossly exacerbated by tech monopolies. Tech barons aren't smarter or more evil than newspaper barons, but they have better tools, and so now they take 51 cents out of every ad dollar and 30 cents out of ever subscriber dollar and they refuse to deliver the news to users who explicitly requested it, unless the news company pays them a bribe to "boost" their posts:

https://www.eff.org/deeplinks/2023/04/saving-news-big-tech

The news is important, and people sign up to make, digest, and discuss the news for many non-economic reasons, which means that the news continues to struggle along, despite all the economic impediments and the vulture capitalists and tech monopolists who fight one another for which one will get to take the biggest bite out of the press. We've got outstanding nonprofit news outlets like Propublica, journalist-owned outlets like 404 Media, and crowdfunded reporters like Molly White (and winner-take-all outlets like the New York Times).

But as Hamilton Nolan points out, "that pot of money…is only large enough to produce a small fraction of the journalism that was being produced in past generations":

https://www.hamiltonnolan.com/p/what-will-replace-advertising-revenue

For Nolan, "public funding of journalism is the only way to fix this…If we accept that journalism is not just a business or a form of entertainment but a public good, then funding it with public money makes perfect sense":

https://www.hamiltonnolan.com/p/public-funding-of-journalism-is-the

Having grown up in Canada – under the CBC – and then lived for a quarter of my life in the UK – under the BBC – I am very enthusiastic about Nolan's solution. There are obvious problems with publicly funded journalism, like the politicization of news coverage:

https://www.theguardian.com/media/2023/jan/24/panel-approving-richard-sharp-as-bbc-chair-included-tory-party-donor

And the transformation of the funding into a cheap political football:

https://www.cbc.ca/news/politics/poilievre-defund-cbc-change-law-1.6810434

But the worst version of those problems is still better than the best version of the private-equity-funded model of news production.

But Nolan notes the emergence of a new form of hedge fund news, one that is awfully promising, and also terribly fraught: Hunterbrook Media, an investigative news outlet owned by short-sellers who pay journalists to research and publish damning reports on companies they hold a short position on:

https://hntrbrk.com/

For those of you who are blissfully distant from the machinations of the financial markets, "short selling" is a wager that a company's stock price will go down. A gambler who takes a short position on a company's stock can make a lot of money if the company stumbles or fails altogether (but if the company does well, the short can suffer literally unlimited losses).

Shorts have historically paid analysts to dig into companies and uncover the sins hidden on their balance-sheets, but as Matt Levine points out, journalists work for a fraction of the price of analysts and are at least as good at uncovering dirt as MBAs are:

https://www.bloomberg.com/opinion/articles/2024-04-02/a-hedge-fund-that-s-also-a-newspaper

What's more, shorts who discover dirt on a company still need to convince journalists to publicize their findings and trigger the sell-off that makes their short position pay off. Shorts who own a muckraking journalistic operation can skip this step: they are the journalists.

There's a way in which this is sheer genius. Well-funded shorts who don't care about the news per se can still be motivated into funding freely available, high-quality investigative journalism about corporate malfeasance (notoriously, one of the least attractive forms of journalism for advertisers). They can pay journalists top dollar – even bid against each other for the most talented journalists – and supply them with all the tools they need to ply their trade. A short won't ever try the kind of bullshit the owners of Vice pulled, paying themselves millions while their journalists lose access to Lexisnexis or the PACER database:

https://pluralistic.net/2024/02/24/anti-posse/#when-you-absolutely-positively-dont-give-a-solitary-single-fuck

The shorts whose journalists are best equipped stand to make the most money. What's not to like?

Well, the issue here is whether the ruling class's sense of solidarity is stronger than its greed. The wealthy have historically oscillated between real solidarity (think of the ultrawealthy lobbying to support bipartisan votes for tax cuts and bailouts) and "war of all against all" (as when wealthy colonizers dragged their countries into WWI after the supply of countries to steal ran out).

After all, the reason companies engage in the scams that shorts reveal is that they are profitable. "Behind every great fortune is a great crime," and that's just great. You don't win the game when you get into heaven, you win it when you get into the Forbes Rich List.

Take monopolies: investors like the upside of backing an upstart company that gobbles up some staid industry's margins – Amazon vs publishing, say, or Uber vs taxis. But while there's a lot of upside in that move, there's also a lot of risk: most companies that set out to "disrupt" an industry sink, taking their investors' capital down with them.

Contrast that with monopolies: backing a company that merges with its rivals and buys every small company that might someday grow large is a sure thing. Shriven of "wasteful competition," a company can lower quality, raise prices, capture its regulators, screw its workers and suppliers and laugh all the way to Davos. A big enough company can ignore the complaints of those workers, customers and regulators. They're not just too big to fail. They're not just too big to jail. They're too big to care:

https://pluralistic.net/2024/04/04/teach-me-how-to-shruggie/#kagi

Would-be monopolists are stuck in a high-stakes Prisoner's Dilemma. If they cooperate, they can screw over everyone else and get unimaginably rich. But if one party defects, they can raid the monopolist's margins, short its stock, and snitch to its regulators.

It's true that there's a clear incentive for hedge-fund managers to fund investigative journalism into other hedge-fund managers' portfolio companies. But it would be even more profitable for both of those hedgies to join forces and collude to screw the rest of us over. So long as they mistrust each other, we might see some benefit from that adversarial relationship. But the point of the 0.1% is that there aren't very many of them. The Aspen Institute can rent a hall that will hold an appreciable fraction of that crowd. They buy their private jets and bespoke suits and powdered rhino horn from the same exclusive sellers. Their kids go to the same elite schools. They know each other, and they have every opportunity to get drunk together at a charity ball or a society wedding and cook up a plan to join forces.

This is the problem at the core of "mechanism design" grounded in "rational self-interest." If you try to create a system where people do the right thing because they're selfish assholes, you normalize being a selfish asshole. Eventually, the selfish assholes form a cozy little League of Selfish Assholes and turn on the rest of us.

Appeals to morality don't work on unethical people, but appeals to immorality crowds out ethics. Take the ancient split between "free software" (software that is designed to maximize the freedom of the people who use it) and "open source software" (identical to free software, but promoted as a better way to make robust code through transparency and peer review).

Over the years, open source – an appeal to your own selfish need for better code – triumphed over free software, and its appeal to the ethics of a world of "software freedom." But it turns out that while the difference between "open" and "free" was once mere semantics, it's fully possible to decouple the two. Today, we have lots of "open source": you can see the code that Google, Microsoft, Apple and Facebook uses, and even contribute your labor to it for free. But you can't actually decide how the software you write works, because it all takes a loop through Google, Microsoft, Apple or Facebook's servers, and only those trillion-dollar tech monopolists have the software freedom to determine how those servers work:

https://pluralistic.net/2020/05/04/which-side-are-you-on/#tivoization-and-beyond

That's ruling class solidarity. The Big Tech firms have hidden a myriad of sins beneath their bafflegab and balance-sheets. These (as yet) undiscovered scams constitute a "bezzle," which JK Galbraith defined as "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it."

The purpose of Hunterbrook is to discover and destroy bezzles, hastening the moment of realization that the wealth we all feel in a world of seemingly orderly technology is really an illusion. Hunterbrook certainly has its pick of bezzles to choose from, because we are living in a Golden Age of the Bezzle.

Which is why I titled my new novel The Bezzle. It's a tale of high-tech finance scams, starring my two-fisted forensic accountant Marty Hench, and in this volume, Hench is called upon to unwind a predatory prison-tech scam that victimizes the most vulnerable people in America – our army of prisoners – and their families:

https://us.macmillan.com/books/9781250865878/thebezzle

The scheme I fictionalize in The Bezzle is very real. Prison-tech monopolists like Securus and Viapath bribe prison officials to abolish calls, in-person visits, mail and parcels, then they supply prisoners with "free" tablets where they pay hugely inflated rates to receive mail, speak to their families, and access ebooks, distance education and other electronic media:

https://pluralistic.net/2024/04/02/captive-customers/#guillotine-watch

But a group of activists have cornered these high-tech predators, run them to ground and driven them to the brink of extinction, and they've done it using "the master's tools" – with appeals to regulators and the finance sector itself.

Writing for The Appeal, Dana Floberg and Morgan Duckett describe the campaign they waged with Worth Rises to bankrupt the prison-tech sector:

https://theappeal.org/securus-bankruptcy-prison-telecom-industry/

Here's the headline figure: Securus is $1.8 billion in debt, and it has eight months to find a financier or it will go bust. What's more, all the creditors it might reasonably approach have rejected its overtures, and its bonds have been downrated to junk status. It's a dead duck.

Even better is how this happened. Securus's debt problems started with its acquisition, a leveraged buyout by Platinum Equity, who borrowed heavily against the firm and then looted it with bogus "management fees" that meant that the debt continued to grow, despite Securus's $700m in annual revenue from America's prisoners. Platinum was just the last in a long line of PE companies that loaded up Securus with debt and merged it with its competitors, who were also mortgaged to make profits for other private equity funds.

For years, Securus and Platinum were able to service their debt and roll it over when it came due. But after Worth Rises got NYC to pass a law making jail calls free, creditors started to back away from Securus. It's one thing for Securus to charge $18 for a local call from a prison when it's splitting the money with the city jail system. But when that $18 needs to be paid by the city, they're going to demand much lower prices. To make things worse for Securus, prison reformers got similar laws passed in San Francisco and in Connecticut.

Securus tried to outrun its problems by gobbling up one of its major rivals, Icsolutions, but Worth Rises and its coalition convinced regulators at the FCC to block the merger. Securus abandoned the deal:

https://worthrises.org/blogpost/securusmerger

Then, Worth Rises targeted Platinum Equity, going after the pension funds and other investors whose capital Platinum used to keep Securus going. The massive negative press campaign led to eight-figure disinvestments:

https://www.latimes.com/business/story/2019-09-05/la-fi-tom-gores-securus-prison-phone-mass-incarceration

Now, Securus's debt became "distressed," trading at $0.47 on the dollar. A brief, covid-fueled reprieve gave Securus a temporary lifeline, as prisoners' families were barred from in-person visits and had to pay Securus's rates to talk to their incarcerated loved ones. But after lockdown, Securus's troubles picked up right where they left off.

They targeted Platinum's founder, Tom Gores, who papered over his bloody fortune by styling himself as a philanthropist and sports-team owner. After a campaign by Worth Rises and Color of Change, Gores was kicked off the Los Angeles County Museum of Art board. When Gores tried to flip Securus to a SPAC – the same scam Trump pulled with Truth Social – the negative publicity about Securus's unsound morals and financials killed the deal:

https://twitter.com/WorthRises/status/1578034977828384769

Meanwhile, more states and cities are making prisoners' communications free, further worsening Securus's finances:

https://pluralistic.net/2024/02/14/minnesota-nice/#shitty-technology-adoption-curve

Congress passed the Martha Wright-Reed Just and Reasonable Communications Act, giving the FCC the power to regulate the price of federal prisoners' communications. Securus's debt prices tumbled further:

https://www.govtrack.us/congress/bills/117/s1541

Securus's debts were coming due: it owes $1.3b in 2024, and hundreds of millions more in 2025. Platinum has promised a $400m cash infusion, but that didn't sway S&P Global, a bond-rating agency that re-rated Securus's bonds as "CCC" (compare with "AAA"). Moody's concurred. Now, Securus is stuck selling junk-bonds:

https://www.govtrack.us/congress/bills/117/s1541

The company's creditors have given Securus an eight-month runway to find a new lender before they force it into bankruptcy. The company's debt is trading at $0.08 on the dollar.

Securus's major competitor is Viapath (prison tech is a duopoly). Viapath is also debt-burdened and desperate, thanks to a parallel campaign by Worth Rises, and has tried all of Securus's tricks, and failed:

https://pestakeholder.org/news/american-securities-fails-to-sell-prison-telecom-company-viapath/

Viapath's debts are due next year, and if Securus tanks, no one in their right mind will give Viapath a dime. They're the walking dead.

Worth Rise's brilliant guerrilla warfare against prison-tech and its private equity backers are a master class in using the master's tools to dismantle the master's house. The finance sector isn't a friend of justice or working people, but sometimes it can be used tactically against financialization itself. To paraphrase MLK, "finance can't make a corporation love you, but it can stop a corporation from destroying you."

Yes, the ruling class finds solidarity at the most unexpected moments, and yes, it's easy for appeals to greed to institutionalize greediness. But whether it's funding unbezzling journalism through short selling, or freeing prisons by brandishing their cooked balance-sheets in the faces of bond-rating agencies, there's a lot of good we can do on the way to dismantling the system.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/04/08/money-talks/#bullshit-walks

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